Articles Tagged withgovernment fraud whistleblowers’ law firm

This February, a federal district judge from the Southern District of New York, part of the Second Circuit Court of Appeals, determined a whistleblower who voluntarily dismissed hisFalse Claims Act (FCA) case against L-3 Communications EOTech Inc. in 2014 could not share in a settlement later reached between L-3 Communications and the federal government in 2015. While this ruling may not be law across the U.S., it is an important opinion for potential qui tam plaintiffs to consider since other federal judges would likely come to the same conclusions. Ultimately, whistleblowers will need to see the entire case through to benefit from a settlement or judgment in the government’s favor.

The L-3 Communications Case

The whistleblower against L-3 Communications was a quality control engineer for the company from May to June 2013. In August 2013, he stated that the company sold defective holographic firearm sights to the American military and law enforcement agencies. The sights were supposed to work in temperatures from negative 40 degrees to 140 degrees Fahrenheit and with humidity. However, they were allegedly defective because they were inaccurate in extreme hot and cold temperatures and humid conditions.

It is no secret that, as a whistleblower’s law firm, we are big fans of the False Claims Act (“FCA” or “the Act”). The Act holds liable any person/entity that presents a false or fraudulent claim for payment to the federal government (or an agency thereof) and/or create false records to that end. In essence, it forbids overcharging the government for goods or services or charging for goods/services that are never delivered. The Act’s qui tam provision is particularly powerful since it enables private individuals to bring suits on the government’s behalf. This is key because it is often private parties, rather than the government itself, who are aware of these fraudulent schemes. Recent trends show that the legislature and the courts are committed to working with whistleblowers and, more generally, to using the False Claims Act as a powerful tool to battle health care fraud and other forms of fraud on the U.S. government.

DOJ Nearly Doubles Per Claim False Claims Act Penalties

As Becker’s Hospital Review, a healthcare industry journal, reported last month, the Department of Justice (“DOJ”) recently published an interim final rule substantially increasing the monetary penalty for violations of the FCA. Previously, penalties ranged from $5,500 to $11,000 per claim. The new penalties nearly double the old ones and range from $10,781 to $21,563. These increased penalties took effect on August 1 and only apply to violations occurring after November 2, 2015. The increase was made pursuant to the Bipartisan Budget Act of 2015 which required agencies to increase FCA penalties and authorized rulemaking to implement a “catch up adjustment” to account for inflation. The DOJ is just one of the agencies updating penalties (the Railroad Retirement Board was the first), but it is certainly among the most impactful.

It’s no secret that as a government fraud whistleblowers’ law firm, we are big fans of the False Claims Act (“FCA”). The FCA is a valuable tool that gives ordinary citizens the power to help fight back against frauds perpetrated on the federal government. While we often write about health care fraud matters, one of the most important things to know about the FCA is that it can apply to frauds involving a wide-range of subject matters. In these complex times, the FCA’s power is especially critical for fighting instances of defense contractor fraud.

Last week, the Department of Justice (“DOJ”) issued a press release announcing that it had filed suit against DynCorp International Inc. (“DynCorp”), a government contractor headquartered in Northern Virginia, for allegedly submitting inflated claims for payment pursuant to a State Department contract. In 2004, the State Department awarded DynCorp a contract to train civilian police forces in Iraq and provide other services related to that effort. The government alleges that DynCorp knowingly permitted one of its main subcontractors to charge “excessive and unsubstantiated rates” for lodging, security, driving, and other services and that DynCorp included those charges in the claims for payment it submitted to the State Department. Additionally, the DOJ alleges that DynCorp added a markup to these already excessive charges that further inflated the amount charged.